Owner not paying HOA dues in Small Condo building

9 Replies

This question has more to do with condo ownership than investing. I own a condo in an 8 unit building in Chicago. One of the units owners has not paid assessments in over 10 years. The HOA has a lien on the unit, but we are wondering if we have other options to seek out the owed association dues rather than wait for sale of the property?

I my state of SC you can file a suit to foreclose on the lien. They will then pay up or loose the property.

We had to do that in my neighborhood to get someone to pay.

The condo board needs to go to court to foreclose on the unit. You can take possession, subject to existing mortgage.

10 years of not paying is lawyer time. Your CCRs will need to be reviewed to see what options the HOA has.

It appears that Illinois law allows you to foreclose on the unit and take ownership. However, another option is to evict the owner and rent out the unit. The HOA then collects the rent to pay off the lien all the while the owner needs to make mortgage payments and pay the taxes or their credit is ruined.

Wow, these are awesome replies everyone! From anyone's experience (and I realize the situation is subjective), but do you think it's better to have the place rented out or sell it?

I would prefer selling the unit as once the debt is paid off, the HOA rental of the unit has to end and the property goes back to the owner who may be angry and still not pay dues. However, unless the owner is underwater on the loan, I suspect regardless of which route you take, the owner will pay the HOA dues before it gets to either occurring.

While serving on HOA Boards, I've dealt with many delinquent owners. What almost always works is the Board sending a letter like this to the owner.

As of today your HOA balance is $2000. You have 7 days to make payment in full. Should payment not be made by this day, the matter will be turned over to our attorney to begin the lien/foreclosure process where the HOA will continue this process until the forced sale of your unit. As per the CCRs, all costs associated with this as well as all attorney fees incurred by the HOA will be placed on your account. We estimate the initial cost will be $1500 for the foreclosure paperwork and costs will continue to go higher the longer you drag this matter out.

Most owners quickly recognize that they are in a no win situation and will pay off the balance before costs skyrocket. No one with equity wants to lose the unit. However, some are dumb or too proud to admit defeat. I've foreclosed on those people and forced the sale of their units... all the while with them telling me it won't happen! 

The condo board should not get involved with renting it out. Sell it off and recoup the money owed from the HOA. Hindsight is great, but they should never have let it go on for 10 years. A condo I owned gave people a year and then placed a lien on the unit and in the time I owned it (20+ years) of the 275 units, they foreclosed on one or two.